Australian Retirement Trust's head of advice Anne Fuchs says financial advisers are key support for those members who need complex financial advice heading towards retirement.

The $240 billion Australian Retirement Trust (ART) has had no intention of moving into the area of the complex advice given by external financial advisers as an increasing proportion of its 2.2 million members head towards retirement.

The head of advice for Australia’s second largest superannuation fund, Anne Fuchs, says ART sees financial advisers as an important source of revenue for the fund and support for those members who will need complex financial advice as they head toward retirement.

Unlike some industry funds, the Brisbane-based ART has had a long connection with external financial advisers, which Fuchs says now bring in some $2.2 billion a year to the fund.

“We work with 4,500 financial advisers now,” she says in an interview with Investment Magazine. “We don’t provide comprehensive advice to our members.

“But there is a huge cohort of around 70,000 members and growing who want to work with an external financial adviser because they have more complex financial needs.”

“While we work with 4,500 advisers, we have to do a lot of education [for them] about investment.”

Fuchs was speaking as she was part of a three city ART roadshow of presentations to financial advisers in Brisbane, Sydney, and Melbourne last week.

The presentations included Fuchs, as well as ART’s newly-appointed head of strategy, investments, Andrew Fisher, head of private corporate assets Elizabeth Kumaru, and chief economist, Brian Parker.

ART is expecting the number of its members who have reached the preservation age − the age where they can access their super − will rise− by more than 40 per cent to around 240,000 by 2027.

Its average balance for retiring members now is around $400,000.

Fuchs says ART had 65 people on staff who provided for intrafund advice to its members on its own products. The super fund has two retirement income products − one from each of the two funds which came together in its merger last year.

Expand scope of intrafund advice

ART is advocating the Federal Government expand the amount of advice which can be given by super funds to their members under the umbrella of “intrafund” advice as part of its review of the recommendations by Allens’ partner, Michelle Levy, on the laws around financial advice.

It wants the government to expand the definition to allow inhouse advisers to consider issues outside ART products such as Centrelink and aged pension entitlements to help advise members at the time of their retirement.

But Fuchs says ART sees a future of working increasingly closer with external financial advisers who can help provide members with the more detailed advice they need as they approach retirement.

She says ART, which was formed from the merger of QSuper and Sunsuper in February 2022, believes that members facing retirement will be better off financially if they are able to get advice around retirement.

While there were many commonalities facing members in their accumulation mode, each person had a different personal and financial situation as they moved into retirement.

“The data proves that those people who do get advice at retirement are materially much better prepared in terms of the right mix of products for them than those who don’t,” she says.

Fuchs, who was head of advice for Sunsuper before the merger, says Sunsuper has been a market leader in its dealings with external advisers.

“We have always been first to market, as a super fund, engaging with external advisers.

“We are really proud of that and continue to invest heavily in that channel because we need them. A lot of our members need complex advice on retirement, and we need those advisers to help us get more advice to members.”

She says relations between financial advisers and industry funds have traditionally not been close, with financial advisers in the past most often dealing with retail super funds with some tied to offering products from specific retail funds.

“The history of the relationship between advisers and industry super funds hasn’t always been a great one,” she says.

“Super funds are huge investment managers and advisers should understand how they manage their money instead of just instantly rolling out a retail fund [for their clients].”

Financial advisers are increasingly becoming independent and were open to suggesting a broader range of investment options to their clients.

“A lot of advisers now are self licensed and not wedded to the traditional, controlled approved product list. They have more freedom in what they can recommend.”

Providing education

ART sees its role as educating them on the potential offerings of industry funds which were able to invest in a large percentage of unlisted assets, such as property, infrastructure, private equity and private dent due to their size and significant cash inflows.

She says some financial advisers had a history of suspicion about funds which invested in unlisted and were almost ideologically wedded to more passive forms of investment.

“Some advisers are devout index investors. If you want to be an index investor, you wont find cheaper pricing than us.”

“But what we are saying to advisers is that, if they are devout index investors, they will not be achieving the benefits of diversification because they wont be exposed to this compelling class called unlisted assets.”

“Each [class of assets] have different roles to play to maximise diversification.”

“[Unlisted assets] are not a huge component of the traditional platforms which advisers have used over the years,” she says. “But in the industry super fund world, it is a huge part of the equation because of our strong cash flows.”

Industry super funds like ART also believe in investing in unlisted assets because they provided an important opportunity to diversify investments.

“Diversification is the key here… [and] in these incredibly volatile times, unlisted assets can deliver a return premium.”

Merging legacy products

ART is planning to merge its two retirement products, which were a legacy of its merger, into one over the next year according to Fuchs.

ART members have access to a Super Savings retirement income account, which was originally launched by Sunsuper, and a QSuper retirement account.

She says the process was “allowing us to look at them with a fresh set of eyes and see which features were really good in both products.”

From July 1, ART will also standardise the retirement income bonus which each product offers for members who roll over their accumulated savings in superannuation into an ART retirement income product.

The retirement income bonus allows members who have accumulated certain tax benefits in accumulation, to take advantage of them if they roll the fund into a retirement product.

She says this has ranged from $1,000 to $7,000 in the past but will rise to $9,000 from July 1.

Fuchs says ART’s inhouse advisers provided 30,000 pieces of advice over the phone over the past year.

But  there was a “huge cohort” of members who had a range of other assets which needed to be considered  in retirement.

“But if they have an investment property or shares, we cant advise on that. That’s where the external advisor community comes in.”

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